“Perhaps it’s no coincidence that paychecks for the majority of Americans got bigger in February due to recent tax policy,” he says.

And with that helping to boost confidence even further, Porcelli says that bodes well on the outlook for household spending, and with it the broader economy, based on the relationship between consumer confidence and recessionary periods in the past.

Just look at the chart below.

Source: RBC Capital Markets

“When confidence hit these levels in the late 90s the recession was four years away and in the mid 60s it was at least three years away,” Porcelli says.

“Just because confidence today is at very elevated historical levels, it doesn’t mean it cannot go even higher or stabilise at high levels.

“Indeed, confidence at these levels in those aforementioned episodes was more indicative of the end of the mid-cycle stage of the expansion and not a signal that a downturn was imminent.”

If that’s any guide, the current US economic upswing could have a lot further to run yet.

The second reading of Q4 US GDP will be released later today.

The economy is expected to expand by 2.5% on seasonally adjusted annual rate basis, down fractionally on the advanced estimate of 2.6% when consumer spending grew by 3.8%.

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